STAG Industrial (STAG) stock is trading around $17.10, close to its 52-week high of $17.60, up 75% in the past 1-year. The stock yields 6.3% above its industry average of 3.5%. Others in its peer group such as Monmouth Real Estate Investment (MNR), yields 5.5%, Prologis (PLD) yields 3.3%, and Duke Realty (DRE) yields 4.8%. STAG stock trades at 14 times the 2013 FFO estimate, which is a 25% discount to its peers.
Strong fundamentals support the dividend payout, details of which are included below:
STAG has a conservative balance sheet with no significant maturities in the near-term. Below is its debt maturity schedule as of June 30, 2012.
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The company has a strong tenant retention rate of 75% as of June 30, 2012. STAG renewed 92% of leases that expired in the second quarter of 2012. Current occupancy lies at 96%.
STAG has a well-diversified portfolio, which is divided among 28 different states, and the top 10 tenants make up only 30% of the portfolio.
The company has significant liquidity in the form of a Bank of America credit facility. As of June 30, 2012, the total available borrowing capacity under the facility was $95 million. Leverage on the balance sheet has continued to decrease from 84% in FY2010 to 81% year-to-date.
The company's main strategy is to acquire individual Class B, single tenant industrial properties in secondary markets through third-party purchases, and sale-leasebacks. STAG has continued to deliver on a disciplined acquisition strategy by acquiring attractive properties at an average cap rate of 9%. In Q2-2012, the company acquired twelve assets for a total of $75 million
STAG industrial stock has returned 75% in the past 1-year, and performed strongly as a newly structured REIT. The biggest risks in investing in the stock remain the availability of capital to fund growth, and any interruption in the acquisitions strategy. That being said, an attractive dividend yield, and valuation is worth your radar screen.
To find a list of other stocks paying attractive dividends, read our report from November 2nd, 2012.
Written by Kapitall's Sabina Bhatia. Tool provided by Kapitall.